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The Charmed Life of Pandora

How a small Danish jewelry shop turned into a massive global business

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In the spring of 2009, jewelry stores were struggling. It was the height of the recession, and with the economy in the tank, many were feeling the effects. Which is why when Elissa Spektor walked by Maurice's Jewelers in Miami, she was stunned to see it packed with customers.

What were all these people doing there? Spektor went inside the local fine jewelry store and asked. She learned they were waiting to make customizable charm bracelets from Pandora; Maurice's had recently started carrying the Danish jewelry brand and word had gotten out.

Spektor, who owns the online jewelry boutique Love and Pieces, recognized the name — there were plenty of Pandora billboards all over Florida — but she hadn't grasped the full extent of the Pandora excitement until that moment. "It was all anyone wanted to buy," she now recalls.

The crowd at Maurice's became a common occurrence, and Spektor began to notice Pandora everywhere: at other fine jewelry stores, at kiosks at outdoor shopping centers, and, eventually, at Pandora's own retail stores in malls.

Though to Spektor it seemed like "Pandora popped up out of nowhere and became an overnight success," that's not exactly the case. The company has been around for more than 30 years, and in the US for 13. What was once a local jewelry shop in Copenhagen has transformed into a multibillion-dollar business that reigns over the jewelry market (which might be why its logo features a subtle crown atop the "o").

Pandora is sold in over 100 countries around the world and is the third largest jewelry company in the US, behind Signet Jewelers and Tiffany & Co. In 2015, it produced more than 100 million pieces of jewelry and brought in 16.7 billion Danish kroner, or about $2.7 billion, in revenue. According to a Karus study, Pandora is the jewelry industry's most visited website, ahead of Tiffany, Blue Nile, and Swarovski, despite having only introduced e-commerce last year.

While the brand sells necklaces, rings, and earrings, the bread and butter of the operation remains its charm bracelets, a cash cow that accounts for 80 percent of Pandora's sales. As Rob Bates, the news director of jewelry trade magazine JCK, notes, "When Pandora became popular, everyone thought it would be a fad and burn out, but the bracelets have proven to have lots of staying power."

As enormous as its presence is, Pandora is still in growth mode. In fact, as Scott Burger, Pandora's president of the Americas, explains it, the company is focused on one goal: to become the most loved jewelry brand in the world.

What's curious about the Pandora story is that there isn't much of one. There's no face of the brand (like Kendra Scott), or a strong ethos that permeates its products (like Alex and Ani); the company doesn't have a rich heritage to mine, like Tiffany or Cartier.

"A blank identity is kind of intentional. They manage to reach a wide array of audiences by not representing anyone."

"A blank identity is kind of intentional," posits DC-based blogger Becky Stone. She considers Pandora's lack of narrative an advantage. "They manage to reach a wide array of audiences by not representing anyone. Their story is that they want you to figure out how to represent yourself, wearing their jewelry."

What we do know is this: Pandora was started in 1979 in the suburbs of Copenhagen by a goldsmith named Per Enevoldsen. His wife Winnie ran the shop upstairs while he tinkered away on jewelry in the basement. The couple often took trips to Thailand and began to both export jewelry from the country and commission Enevoldsen's own designs to be made there, according to Jeweller Magazine. The Enevoldsens eventually opened their own factory in Thailand and hired designer Lone Frandsen to expand their line. In 1987, after Pandora saw rapid success selling to jewelry stores in Denmark, the couple shifted their strategy to strictly wholesale and moved to Thailand two years later.

There are gaping holes here, in terms of what happened during Pandora's early years — the company's site glosses over more than a decade of history — but fast forward to 1996, and another designer, Lisbeth Enø Larsen, was hired by Pandora. Together with Frandsen, she built the prototype for Pandora's now-ubiquitous charm bracelet based on a concept Enevoldsen envisioned. The bracelet base featured a unique design resembling a silver rope, on which bead-like charms made of gold, silver, Murano glass, and semi-precious stones could be easily added and removed. The duo spent a few years developing the bracelet, and after getting a patent, Pandora started selling it in 2000.

Of course, Pandora didn't invent the charm bracelet. For centuries, "humans have carried talismans to repel evil and bring good luck," NPR writes. "The concept of wearing a charm on a wrist goes back to antiquity, and they were primarily seen as objects for protection," says Yvonne Markowitz, a former jewelry curator at Boston's Museum of Fine Arts and the co-director of the Association for the Study of Jewelry and Related Arts.

Charm bracelets were a favorite accessory of Queen Victoria, who gave bird and flower charms to her children and friends; after Prince Albert died in 1861, Victoria made charms for mourning, with images of her husband carved into stones. There was later an American charm bracelet explosion in the 1920s, which Markowitz largely attributes to socialite Wallis Simpson, whose husband Prince Edward (great-grandson of Victoria and Albert) gifted her with expensive cross charms.

Throughout the '20s and ‘30s, "charms were made of platinum, diamonds, and precious stones, and had themes of the Jazz Age, or were shaped like trains, airplanes, and locomotives," says Markowitz. America saw another charm craze in the 1950s after word got out that First Lady Mamie Eisenhower was an adamant collector. Photos of stars like Elizabeth Taylor and Joan Crawford wearing charm bracelets helped too. There were small companies in Rhode Island that were known for their charm bracelets, Markowitz says, but none came close to the commercial success of Pandora.

Pandora's bracelets came to the US in 2003, first at local gift shops and then at fine jewelry stores, prompting the company to set up an American headquarters in Maryland. The Rochester Democrat and Chronicle soon reported that the bracelets were becoming bestsellers because of their "upscale look and pricing." Sure, Pandora was and is largely affordable — back then silver charms were priced at $15 and sterling silver foundational bracelets $21 — but it has also always had expensive items like $400 charms in its arsenal. Some analysts even refer to it as the "middle-class Tiffany."

"They're very high-end and they're gorgeous," Penny Decker, an owner of a gift shop in upstate New York, told the Chronicle. "We're all sporting them. It's got that David Yurman look to it. You can wear it dressed up or down."

"Jewelry used to be segmented, where stores either sold fine jewelry or affordable silver pieces, but jewelers were desperate for anything and so a lot of them started selling Pandora."

Pandora's wholesale strategy was initially one of quantity. "Frankly, it was their strong footprint that made them be able to catch so many consumers," explains Hana Ben-Shabat, a retail partner at A.T. Kearney. "They were hard to miss."

By 2004, Pandora was available in 700 jewelry stores in the US, and that number doubled in 2005. The brand expanded to other markets like Canada, Australia, and the UK, picking up momentum everywhere it went. In 2007, it started rolling out brand-owned retail stores, no longer relying solely on wholesale partners. Today, the US is Pandora's largest and fastest-growing market.

While the charm bracelets were a blockbuster pretty much the moment they hit American stores, Bates of JCK notes that the recession is what really helped bolster sales. "Jewelry used to be segmented, where stores either sold fine jewelry or affordable silver pieces," he says. "But jewelers were desperate for anything and so a lot of them started selling Pandora. It turned out to be the right product at the right time."

Which explains the crowd at Maurice's in Miami. Fine jewelers who couldn't sell diamonds found a lifeline in Pandora, and the company benefited right back: revenue climbed from 1.9 billion kroner ($287 million) in 2008 to 3.5 billion kroner ($528 million) in 2009. Without Pandora, Michael O'Hara of Consensus Advisors told JCK in October 2010, "a lot of independents would be out of business."

"Many people are intimidated coming into a jeweler. This gets them comfortable in your store, so when it's time to buy a major piece of jewelry, you at least have a shot at them," Robert Smith, a jewelry store owner in Ohio told JCK's Bates. "We have women come in and spend $30 a week. Over a year, they've spent a lot of money, but don't feel like they bought a $5,000 piece of jewelry."

Pandora rose to prominence at a time when the American economy was in decline, and it continues to be immensely popular. "The retail landscape permanently conditioned consumers to expect lower price points or steep discounts after the recession," says Steve Barr, a retail analyst with PricewaterhouseCoopers. "Folks who found Pandora became used to the affordable price point, and since then, shoppers have had a totally different perspective on value."

Cost aside, there are also Pandora's charms to consider. Today Pandora offers more than 800, and the sheer range of choices — pink cupcakes, a snowboarder, an espresso can, Christmas trees, Christmas pudding, a chef's hat, paw prints, tiaras, gondolas, hedgehogs, Chinese dolls, a perfume bottle that reads "Eau de Pandora" — makes shoppers feel like they are getting a truly personal design.

Beth Moeri, Pandora America's chief merchandising officer, considers the process of charm development both an art and a science: "On the art side, understanding future trends and colors, and on the science side, analyzing the historical selling of the past and existing collections." Moeri says Pandora keeps an eye on "trends from fashion runways to Main Street." It also relies on recommendations from trend forecasting agencies like WGSN (its new watermelon charms, for example, came from WGSN's counsel that the fruit is in fashion).

"They tapped into the consumer's desire for jewelry pieces that are highly specialized," says Erica Russo, fashion director of accessories and beauty at Bloomingdale's, which has sold Pandora since 2011. "There's something for everyone, so there's a wide appeal for shoppers."

What makes Pandora charms so striking is that they're a clever reimagining of the clunky charms of decades past. "The charms from my childhood were these big dangling things that were hard to get on a bracelet and had to be opened with a tweezer," says Leanne Wu, the Seattle-based charm bracelet enthusiast behind the blog Charms Addict. "They weren't elegant. But then Pandora introduced a product that was low-profile yet fashionable and easy to get on and off, and it brought back all the excitement for the charm bracelet."

"You get really excited so you buy one, and then you buy two, and then you're pretty much addicted to filling up your entire bracelet."

The plethora of charms incentivize shoppers to return again and again. As Wu puts it, "You get really excited so you buy one, and then you buy two, and then you're pretty much addicted to filling up your entire bracelet."

"People who buy one Pandora charm are more likely to come back, and keeping coming back," says Jaime Barr, a US Footwear & Accessories expert at WGSN. "They keep the consumer hooked by rolling out new, trendy charms, essentially building a loyal base of clientele. It's an extremely smart way of building a business."

Pandora retires slow-selling charms twice a year, and according to Wu, who has an entire section on her blog dedicated to rare charms, there's an appetite among fans for these discontinued items. Pandora fans often buy, sell, and trade on Facebook — one fan group that's based in Malaysia has close to 16,000 members, and another one in Australia has close to 10,000 — or search eBay for rare charms.

The most sought-after charms are from the early days of Pandora, before the brand exploded. There's the Blue Primrose Path, which was only released in Germany and is selling on eBay for $595. There's also the Princess and the Pea charm, the Hans Christian Andersen hat charm, and the cola can charm. The winiper charm that's given to Pandora employees and isn't available for purchase is particularly coveted; it can be yours, if you're willing to drop the $1,500 some sellers want for it.

Pandora used to release new collections twice a year, but in 2013, the company began debuting new jewelry seven times a year, with collections spaced less than two months apart. Bloomberg speculated that the company was taking a cue from fast fashion retailer Zara, which rolls out new product every two weeks.

Pandora's Burger believes this is what's helped Pandora stay relevant and beat other jewelry brands. And to be sure, it has fair share of competitors — like Trollbeads, another Danish charm brand that launched around the same time; Chamilia, which is owned by Swarovski; and Nomination, an Italian brand that sells flat stainless steel charms — but none have achieved Pandora's kind of dominance.

"Dropping new products gives us the ability to deliver style and fashion trends that you see from the costume players, but we use the same materials higher-end brands like Tiffany or David Yurman use," says Burger. "And we deliver those things at a pace other people would find more challenging."

This volume and speed only enhances the giftable nature of charm bracelets. "Once people got a Pandora bracelet, it became a tradition to just keep buying them charms," says blogger Stone. "It's an easy box to check." According to Ayako Homma, a senior research analyst at Euromonitor, more than 60 percent of women who own Pandora jewelry receive it as a gift, and half of those gifts are bought by men.

"The jewelry market is so fragmented, with people shopping just about everywhere, so it really helps that Pandora has such visibility," says Homma. "Men aren't usually familiar with jewelry brands, so having stores as a destination was important to Pandora's growth."

Daniel Sher, a math teacher in Connecticut whose girlfriend loves Pandora bracelets, jokingly likens Pandora's strategy to a trap. "You go in thinking you'll buy something for you girlfriend once," he says, "but because the whole concept is about keeping up with the charms each season, you suddenly realize you're going to be shopping at Pandora a lot. Like, a lot a lot."

Because of Pandora, Marsha Sullivan, a 52-year-old who lives in New Jersey, says she's able to keep her three daughters with her wherever she goes, even when they are at summer camp, in medical residency, or traveling abroad.

"Pandora ads are always about married couples, moms getting gifts from their kids."

"I have each of their initials on my bracelet, but I also have charms that remind me of each of them," the Sullivan says outside Pandora's New York City flagship store in Soho. Pointing to her wrist, she proudly shows off her collection of Pandora charms: a soccer ball, a snowflake, a ballet slipper, a panda, a heart frosted in cubic zirconia. "I'm running out of room here, so I'm going to browse and see if I'm ready for another bracelet."

Sullivan is a typical Pandora customer. In its advertising, Pandora explicitly focuses on middle-aged women. "Pandora ads are always about married couples, moms getting gifts from their kids," says Barr of WGSN. "I don't think they'd ever go the route of a young millennial gifting his girlfriend, it's just not their demographic."

"Talking to an older crowd in their commercials is what's really helped them," agrees Nikki Baird, a managing partner at RSR Research. "A lot of marketing campaigns alienate women because the imaging doesn't work. Even commercials for anti-wrinkle show women who look like they are 25! But Pandora works in the nostalgia of having kids, grandkids, and that's how they appeal to that targeted age."

That said, the company is interested in reaching younger consumers. This past May, for example, Pandora was one of the sponsors at Coachella. "It was important for us to step outside of what people know about Pandora and really insert ourselves into the heart of Coachella by showing audiences that we know trends and culture," says Pandora chief marketing officer Charisse Ford.

To understand what people know about Pandora, you need to visit its stores. The interiors are white and clean, which Burger says is meant to "remind you a bit of our Scandinavian heritage — it's clean and is an inviting environment to shop in."

At the front of each Pandora store is an "activity wall," where the company promotes the latest trends. This season it's pushing two-toned jewelry combinations. Signs read, "Most Wanted: Mixed Metals," and combinations of gold and silver pieces sparkle under lights. There's also plenty of jewelry made with Pandora Rose, a proprietary blend of copper and silver the company rolled out in October 2014 that looks like rose gold but sells for a fraction of the price.

The main reason most shoppers are here, of course, are the charms. The average Pandora store carries 850 charms and the Soho store has eight stations where associates work one-on-one with shoppers to customize bracelets. The charms are each strung through a silk ribbon and laid in white satin boxes, all lined up neatly in showcases. Pandora's Disney collection, which launched in 2014 and features charms shaped like a Minnie Mouse bow and Disney Princess dresses, has a case of its own. (Pandora has previously done collaborations with the NFL, MLB, and the National Breast Cancer Association.)

"I usually browse their website if I'm in the market for a new charm before I actually come in the store," says Helene Weinraub, a business consultant shopping at the Soho store. "Because once you have your heart set on a diamond charm, it's pretty hard to resist, and I'm not going to say I've always resisted them."

Pandora is aiming to make its stores more interactive. At the company's newest location, in the Westfield World Trade Center mall in downtown Manhattan, there are touchscreens that shoppers can use to look up product information. The store also features a hologram device that displays blown-up 3D images of each charm, so shoppers can "appreciate all the craftsmanship that goes into Pandora product," Laurie McDonald, the brand's US general manager, explained at the store opening last week.

The average Pandora store carries 850 charms and the Soho store has eight stations where associates work one-on-one with shoppers to customize bracelets.

While Pandora is testing how this technology performs in the Westfield store, it is also experimenting with a less formal shopping experience. In one area of the store, shoppers can pick out charms on their own without the aid of a store associate.

"We found that the consumer definitely likes to touch and feel the product," McDonald said. "She wants to experience it herself. There are times when she will absolutely want to work with a stylist in a store and use them as a guide to find the best product, but we feel there will be a lot of individuals who want to explore Pandora on their own."

Pandora's success has been the stuff of legend in the financial world. In 2008, Axcel, a private equity firm based in Denmark, bought a 60 percent stake in Pandora from Enevoldsen. In 2010, it took the jewelry company public on the Nasdaq Copenhagen stock exchange. After it sold $1.83 billion worth of shares on its first day, publications like the Wall Street Journal declared it one of Europe's top IPOs of the year. (Enevoldsen now owns less than 5 percent of the company's shares and is no longer actively involved with Pandora.)

Business didn't initially soar as expected — with 2011 headlines proclaiming Pandora wasn't going to be the hit everyone expected it to be — but revenue jumped from 6.6 billion Danish kroner ($996 million) in 2012 to 9 billion kroner ($1.35 billion) just one year later, and then to 11.9 billion kroner ($1.79 billion) in 2014. "Diamonds aren't forever," declared Seeking Alpha that December. "Pandora jewelry is." This year, the company expects revenue will be as high as 20 billion kroner ($3 billion).

While wholesale accounts with independent jewelry stores helped Pandora conquer the market during the recession, Burger says the company is no longer interested in being in as many stores as possible. Instead it's focused on being able to control how Pandora is sold through Pandora's own stores and through partnerships with more exclusive retailers.

Last year, Pandora closed 183 of its wholesale accounts in the US (it's still sold in 2,299 American stores) and opened 400 new retail locations worldwide. The company plans to add 50 more company stores in the US by the end of 2018.

"From a distribution standpoint, we're taking a quality over quantity approach," Burger says. "We reached a place with certain retailers where they weren't willing to give us more space, or they weren't maintaining the right brand standards or those types of things, and we had to make decisions to close them. Customers are increasingly telling us they prefer to shop in a high-branded environment, and the highest branded environment we offer is the Pandora store. We see that being an increasingly important part of the brand evolving in our market."

Tightening up its sales network makes sense, as Pandora already controls nearly every other aspect of production. It designs and manufactures its jewelry in-house — the former at its headquarters in Copenhagen, and the latter at its factory in Thailand, where 11,000 people work on its hand-finished jewelry. It also handles all its own distribution to wholesalers and brand stores.

The other tactic it's employing in an effort to become "the world's most loved jewelry brand" is thinking beyond the charm bracelet. About a year ago, Pandora started heavily pushing rings, a category it sold for years but was never a top performer. It debuted a campaign promoting its ring collection in April of last year and also rolled out an in-store concept in select locations called the "ring bar," where customers are encouraged to pick out several rings and stack them on one finger. The effort has been somewhat of a success so far; rings now account for 12 percent of its revenue, up from 7 percent in 2014.

Earrings are next. At the Westfield opening, McDonald said shoppers can expect "a lot more earring designs," most of which Pandora will introduce in the next six months. Promoting new categories can help boost sales, but it's hard to imagine charm bracelets won't always be the heart of the business.

"For me, the rings aren't as collectable as the charms," says Ellie, a Pandora blogger. "Overall, I think fans love the charms so much because they are customizable and collectible. That's why people like the rings, but don't get as into collecting them. It's much easier to choose a charm that represents a special moment in your life than it is a ring or a necklace."

Chavie Lieber is a senior reporter at Racked.

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